Sedgefield Capital Corporation
Exhibit
10.7
Sedgefield
Capital Corporation
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0000
Xxxxxxxxxx Xxxxxx
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(000)
000-0000
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Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000
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January
19, 2005
PERSONAL
AND CONFIDENTIAL
SUBJECT
TO A CONFIDENTIALITY AGREEMENT
Mr.
Xxx
Xxxxxx
Revolutionary
Concepts, Inc.
0000
Xxxxx Xxxxx
Xxxxxxxxx,
XX 00000
Dear
Xxx:
Per
our
discussions, this letter agreement ("Agreement") will confirm our understandings
regarding the exclusive engagement of Sedgefield Capital Corporation
("Sedgefield") by Revolutionary Concepts, Inc. (“RCI” or the "Company") to
render certain financial advisory services to the Company.
We
have
reviewed your private placement memorandum dated November 9, 2004, your business
plan and the projected profit and loss statements provided by you. We have
assumed that all are accurate. Based upon these representations, we have
formulated the following recommendations to RCI. We believe this structure
offers the best and most realistic initial market capitalization for
RCI.
1. Terms
of Offering.
We
discussed the commencement by RCI of a private placement of securities under
exemptions afforded by Regulation D, Rule 506 as promulgated by the Securities
& Exchange Commission. The Company would privately offer units of securities
to qualified investors at an offering price of $5,000.00 per Unit. Each Unit
would consist of 10,000 shares of common stock, 10,000 Class A Warrants and
10,000 Class B Warrants. The Class A Warrants would have an exercise price
of
$0.65 and the Class B Warrants would have an exercise price of $0.90. Each
warrant would be exercisable for one share of RCI common stock for a period
of
two years from registration. The warrants may be redeemed by the Company, at
the
company’s election, for $0.05 per warrant upon meeting certain
conditions.
This
structure would provide the Company an opportunity to raise $500,000 in capital
from the sale of 100 Units. In addition, it would provide the Company an
opportunity to raise an additional $650,000 from the exercise of the Class
A
Warrants and $900,000 from the exercise of the Class B Warrants. If all Units
are sold and all warrants exercised, the Company would receive gross proceeds
of
$2,050,000 from this plan.
On
a
fully diluted basis there would be 20,000,000 shares outstanding after the
offering and exercise of all warrants. The figure breaks down as
follows:
a. 16,000,000
shares to RCI principals, representing 80% of the Company;
b. 3,000,000
shares to the investors, representing 15% of the Company; and
c. 1,000,000
shares to Sedgefield and its associates, representing a total of
5.0%.
Upon
successful completion of the private offering, we would assist the Company
in a
follow on public registration of securities through a process generally known
as
a “selling shareholders” offering. The public filing is expected to include a
registration statement with the Securities & Exchange Commission to register
the sale of the common stock shares, the sale, transfer and exercise of the
warrants and subsequent resale of the underlying common stock or other
securities. This would permit the public resale of the Company’s registered
securities and the implementation of a public trading market.
In
short,
the Company would publicly register the securities that were offered in the
private transaction, thereby taking RCI public by registering the holdings
of
those shareholders. The registration process provides an exit strategy for
the
private placement offerees, makes the offering more attractive to offerees
and
provides the Company with a liquid market for financial management. We believe
this structure also presents an outstanding investment possibility for the
private offerees.
2.
Services.
In
connection with this plan, we will provide the following services:
| (a) |
Selection
of and engaging experienced securities counsel to clearing the 504
or 506
exemption under Regulation D, including preparation of a suitable
private
placement memorandum (PPM), subscription agreements, accredited investor
questionnaires, along with required forms and filings with the Securities
& Exchange Commission and state regulatory officials;
|
| (b) |
Assisting
with the planning and structure of the Private Placement
Memorandum
|
| (c) |
Selection
of and engaging experienced counsel to assist with corporate actions
establishing an appropriate capitalization, including preparation
of
amendments, Board resolutions and related actions;
|
| (d) |
Attendance
at meetings, roadshows and
otherwise;
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| (e) |
Selection
of and engaging experienced securities counsel for the closing of
the
Private Placement, including final forms to the SEC and state regulators,
and escrow release arrangements in compliance with 10b-9;
|
Assuming
the successful completion of the private placement, we will then undertake
the
following services:
| (f) |
Selection
of and engaging experienced securities counsel for the preparation
of a
suitable registration statement on Form SB-2 or other suitable
registration statement or offering circular for filing with the SEC
and
state regulators;
|
| (g) |
Assist
with actions required by the Company, including Form ID, Forms 3,
4, and 5
and related documents, and establishment of audit and executive
committees;
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| (h) |
Assist
with selection of transfer agents, investment relations firms, broker
dealers and market makers;
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| (i) |
Assist
the Company with its application for listing in a recognized securities
manual such as Standard & Poor’s, Mergent, or similar
listings;
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| (j) |
Coordinate
introductions and consultations to potential brokers, placement agents,
and market makers;
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| (k) |
A
review of the Company’s processing procedures, including web based
tools;
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| (l) |
A
review of the human resource, personnel and organizational policies
and
recommendations for payroll and personnel software, policies and
procedures;
|
| (m) |
Assist
with the selection of a PCOAB auditor for initial and ongoing audit
and
financial review for filings;
|
| (n) |
General
management consulting on business
operations.
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The
Company agrees to pay Sedgefield for its services with a financial advisory
fee
("Advisory Fee") as follows:
| a. |
$10,000
upon the signing of this agreement, which shall cover the costs of
the
initial management consulting and the services of an attorney for
preparation of the private placement memorandum and legal opinion
regarding the exemptions under Regulation D and guidance on restructuring
of the current share structure;
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b.
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Additional
payment(s) totaling $150,000 (payment may be made from the proceeds
from
the PPM) to cover the costs of:
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| i. |
Legal
expenses in connection with the public
offering;
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ii.
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Costs
of initial listing in a recognized securities manual such as Standard
& Poors or Mergent;
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iii.
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Registration
costs and fees to the Securities & Exchange
Commission;
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| iv. |
Costs
of “edgarization” of all filed documents until effectiveness;
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| v. |
Costs
of printing of prospectus and preliminary
prospectus;
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vi:
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Costs
of wire services, press releases or corporate announcements until
effectiveness;
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vii
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Costs
of filing fees with the National Association of Securities Dealers
and
market maker applications for pinksheets or OTCBB;
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viii.
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Costs
to establish transfer agent and registrar for common stock and
warrants;
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| c. |
Incidental
costs incurred by us including reasonable out-of-pocket fees, expenses
and
costs, including, items such as travel, accommodations, telephone,
courier
and delivery and
|
| d. |
1,000,000
shares of the proposed common stock outstanding including the PPM
and
share restructuring, upon the signing of this Agreement, to be included
in
the registration of the public
offering.
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3. Scope
of Agreement.
We
will
engage and pay for the services of an experienced securities attorney licensed
to practice law before the United States Securities & Exchange Commission.
The attorney will be engaged by us solely to act as special securities counsel
for legal and financial advisory services. We understand that his client is
the
Company and not us or the individual officers, directors or shareholders.
We
may
also assist in the selection of an auditor on your behalf that is qualified
under the rules of Xxxxxxxx-Xxxxx to issue audit reports for companies filing
with the Securities & Exchange Commission, that is in good standing with the
Public Company Accounting Oversight Board to issue audits required to be
included in the filings. PPS will be responsible for any and all related fees
for accounting and audit work.
We
are
not your advisers in tax or accounting matters nor with respect to legal matters
outside the scope of this engagement. We serve only as your management
consultants. You will evaluate the risks and benefits of our advice and make
your business judgments accordingly.
The
anti-fraud provisions of federal and state law strictly govern all securities
transactions. Any material omission or misrepresentation is illegal and can
result in lawsuits, regulatory action or even criminal actions. You agree to
indemnify us to the fullest extent permitted by law.
We
will
rely on the information provided by you, your accountants, counsel, advisers,
employees and other representatives in response to these and other inquiries
(the "Information"). You agree to furnish us complete and accurate Information
concerning the Company. We will ask for complete due diligence materials and
officer-director questionnaires. You will also provide us with access to the
Company's officers, directors, employees, independent accountants and legal
counsel for the purpose of performing or verifying obligations under this
Agreement or required by law. If the Information becomes materially inaccurate,
incomplete or misleading during our engagement, the Company shall promptly
advise us in writing. Accordingly, we assume no responsibility for the accuracy
and completeness of the Information. We are nonetheless entitled to rely upon
the Information provided to us without independent verification.
This
Agreement shall be governed by the laws of the State of North Carolina without
regard to the conflict of laws provisions thereof. We also agree that
Mecklenburg County, North Carolina shall be the sole venue for resolution of
any
disputes that may arise under this Agreement.
If
this
correctly reflects our agreement, please confirm by signing and returning to
me,
together with the initial payment. Upon our countersignature, this Letter shall
constitute a binding agreement.
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Very
truly yours,
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SEDGEFIELD
CAPITAL CORPORATION
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AGREED
TO AND ACCEPTED:
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REVOLUTIONARY
CONCEPTS, INC.
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By:
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Name:
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Title:
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